When an aged person goes into care it is usually necessary to pay a Residential Accommodation Deposit (RAD). For most aged care providers the RAD is in excess of $400,000.00. Irrespective of who makes the money available for the RAD, in the event of the death of the resident, the aged care provider refunds the RAD to the estate of the deceased resident. It then passes under the Will of the deceased person.
It often happens that the resident does not have sufficient funds to pay the RAD before going into care. Therefore a third party provides the funds on occasions. A difficulty arises in the event of the death of the resident in that the RAD is refunded to the estate of the deceased resident. The care provider has no obligation to pay the RAD to whoever paid it to them. The resident is deemed to have paid the RAD. It is therefore important to have documentation put in place before the RAD is paid in the event that a third party pays the RAD for the resident and expects that RAD to be repaid to him or her when the resident dies. The documentation could be in the form of a loan to the resident.
If the Will of the resident does not provide for the refund of the RAD to the third party (and usually it doesn’t) then the provider of the RAD can claim the amount of the RAD as a debt in the estate. Often this detail is overlooked at the time when an elderly person goes into care as the emphasis is firstly on finding a suitable care provider and then raising the RAD. The circumstances surrounding the repayment of the RAD are often overlooked and can become a problem (depending on who pays the RAD) when the resident dies. If the RAD is paid by a third party then the Will of the resident can be changed to cover that scenario, however often the resident no longer has testamentary capacity to make a new Will when he or she goes into care.
It is important that legal advice be obtained to ensure that the provider of the RAD (if it is not the resident) gets his or her money back when the RAD is refunded by the care provider.
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